FORMER GILLETTE EXEC ARRESTED ON FRAUD CHARGES

Alleged Scheme Involved Kickbacks From Marketing Vendors

CINCINNATI (AdAge.com) -- A former Gillette Co. executive was arrested Friday on 15 counts of mail and wire fraud and one count of money laundry in connection with an alleged scheme to demand kickbacks from five promotion and marketing vendors.

An indictment handed up by a federal grand jury in Boston alleges that Gino Deluca, 46, a former director of Gillette's permanent merchandising systems department, steered more than $21 million worth of business to Interesting Displays & Ideas Inc., Top Marketing and Dascal & Associates, all of Montreal, Quebec, and MGM Graphics, San Diego, for services such as advertising, marketing, printing and distribution for Gillette. Interesting Displays & Ideas received $15 million of business described in the indictment.

Mr. Deluca pleaded not guilty today and was released without bond to home custody with electronic monitoring, a spokeswoman for the U.S. Attorney's office said.

oversaw a $30 million to $40 million-a-year budget and had the authority to approve transactions for up to $120,000 without further organizational review, according to the indictment. He worked for Gillette from 1980 until he was fired in August, beginning his career in Canada and moving to the Boston headquarters in 1996.

"We discovered grounds to terminate [Mr. Deluca], which we did, and at the same time thought that because of the severity of what was discovered that further legal action was required," a Gillette spokesman said. "We went to the Department of Justice and met with them and presented the case and they took it from there."

Mr. DeLuca's attorney, George Garfinkle, was not immediately available for comment.

U.S. Attorney Michael Sullivan, whose office is prosecuting the case, is a former Gillette executive.

$600,000 in alleged kickbacks
The indictment alleges that before he was fired, Mr. Deluca allegedly got nearly $600,000 worth of kickbacks from vendors to whom he steered Gillette contracts. Mr. Deluca told his staff to select the vendors who were paying him kickbacks despite quality problems reported by other Gillette employees.

In return, Deluca got a $269,000 Scottsdale, Ariz., condo; a $32,000 addition to his home; a $25,400 Isuzu Trooper; thousands for vacations and cruises and appliances for his mother; and $225,000 wired to a Swiss bank account, the indictment alleges.

The indictment alleges that when the owner of one of the companies, MGM Graphics, expressed concern about the payments, Mr. Deluca warned that plenty of other printers would jump at the chance to serve Gillette.

Gillette Chairman-CEO James R. Kilts has made business integrity a cornerstone of his career, the spokesman said, and the company has set up an anonymous hotline for employees to report possible wrongdoing, though he said it was not related to the case.

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Jack Neff

Jack Neff, editor at large, covers household and personal-care marketers, Walmart and market research. He's based near Cincinnati and has previously written for the Atlanta Journal Constitution, Bloomberg, and trade publications covering the food, woodworking and graphic design industries and worked in corporate communications for the E.W. Scripps Co.